Finding a great house at a low price is truly like a one-in-a-million chance. You would have to search for months or even years to find that rare MLS listing in Toronto. Because of this, most bargain-hunting buyers take their chances by making a lowball offer on the house, hoping the seller might accept their proposal. However, making a lowball offer can be a double-edged sword for a homebuyer. The seller might take offence to the low offer and the chance of securing the home might slip away from your hands.

So, when and how can you make a lowball offer on a house without risking losing it? Let’s explore below!

What Is Considered a Lowball Offer on a Property?

A lowball offer is a bid on a property that is significantly lower than the asking price. In general, any offer that is 10% per cent or more below the asking price is considered lowballing. For instance, if an MLS listing in Toronto is listed for $600,000, a lowball offer would be around $540,000 or less.

However, what actually counts as a lowball offer can vary depending on the housing market conditions. In a competitive real estate market, even offers that are only 3 to 5 per cent below the asking price may be seen as lowballing. This is especially true if the home seller has received a lot of offers.

When Should Buyers Think About Making a Lowball Offer on a House?

Here are some situations in which a buyer can think about making a lowball offer on a house in Toronto -

1. The Asking Price for the Home Is Too High

Sometimes, a home is listed at a price that is far above its true market value. This can happen if the seller is being overly optimistic or not considering the current conditions in the housing market. So, before you make a lowball offer on a house, do your homework and see if the home is overpriced. If you find that the MLS listing in Toronto is indeed priced higher than comps, go ahead and make a lowball offer.

2. The House Is in Need of Renovations

If you notice that the property is outdated and needs repair work, you can go for a lower offer. For this, you must hire a contractor who can estimate the renovation costs and then deduct these expenses from the asking price.

3. The House Has Been for Sale for Quite Sometime Now

If you notice that the home has been on the market for more than a few months, it’s a sign you can go for a lowball offer. Sellers often get anxious when their homes don’t sell quickly and they might be more willing to negotiate under this pressure. While putting forth the lowball offer, just make sure to provide reasons for your offer such as housing market data or the length of time the home has been up for sale.

4. The Housing Market Is Leaning Towards Buyers at the Moment

A buyer’s market is the perfect time to make a lowball offer on an MLS listing in Toronto. You can explain your offer by highlighting the current conditions in the housing market and that you have a lot of other properties to consider. Sellers may be more inclined to accept a lower offer if they know they’re competing against other homes in the market.

How to Make a Lowball Offer That Sellers Might Accept?

1. Take a Look at the Housing Market

Before putting forth a lowball offer, take time to research how the Toronto housing market is looking now - in favour of buyers or sellers. You must also look at comparable homes in the neighbourhood to see what similar properties have sold for recently. This information can give you a better understanding of the home’s true market value and help you make a competitive offer.

2. Identify What Is Pushing the Seller to Sell Their Property

Understanding why the seller is selling their home can help you better tailor your offer on the MLS listing in Toronto. If the seller is in a hurry to move due to a job transfer, financial issues, or other personal reasons, they might be more willing to negotiate.

3. Start With a Low Offer, But Keep It Reasonable

True, a lowball offer means lower than the asking price but it doesn’t imply it can be way lower. If you offer too low on the house, you may end up insulting the seller and ending negotiations before they even start. A good rule of thumb is to offer about 10 to 20% lower than the home’s market value depending on the market conditions and how long the home has been on the market.

4. Let the Seller Know You Are Serious About Buying the Home

Showing the seller that you’re a serious buyer is important when making an offer and it’s especially important when making a lowball offer. You can show your seriousness by including a pre-approval letter on the offer on the MLS listing in Toronto. A serious offer can also include an earnest money deposit which demonstrates your commitment to buy the home.

5. Show the Seller the Issues That Need Fixing in the Home

If the home has any problems, make sure to mention these issues in your offer. Also, you must provide an estimated cost for their repairs from a licensed contractor to justify your lower price.

6. Be Prepared to Negotiate When You Make a Low Offer on a House

A home seller readily accepting your lowball offer is another one-in-a-million chance thing. So, when offering a lowball offer on a house, stay prepared to negotiate. If and when the seller responds with a counteroffer, you must consider it carefully and respond to it accordingly.

7. Keep Your Emotions in Check During the Whole Home-Buying Process

Don’t fall in love with an MLS listing in Toronto which is far out of your budget and you’re hoping to secure it with a lowball offer. If you do this, you might end up offering more than what you can afford on the house.

Always Get a Realtor’s Help When You Want to Make a Low Offer on a House

A seller considers many factors in the offer beyond just the price such as contingencies and closing dates. An expert Realtor understands all these elements that a seller prioritises and can help you create a strong offer that sellers will take seriously. So, if you’re considering making a lowball offer on an MLS listing in Toronto, always reach out to a Realtor first. With their knowledge and expertise, you can secure your dream home in Toronto at the lowest possible price.